MY Stock 118 KLSE News & Tips

Sunday, October 1st, 2017

SERDANG, Oct 1 — The local authorities need to make adjustments on the existing ruling to allow food truck operators to carry out their businesses. Agriculture and Agro-based Industry Minister Datuk Seri Ahmad Shabery Cheek said such…

PETALING JAYA: The Inland Revenue Board (IRB) will not be making amendments to the Income Tax Act 1967 to allow companies exempted from audit by Companies Commission of Malaysia (SSM) to file returns using unaudited accounts.

The Companies Act 2016, effective this year, allows for dormant companies, zero-revenue companies and threshold-qualified companies (those earning less than RM100,000 revenue and holding at most RM300,000 worth of assets) to be exempted from having to audit their accounts.

“As for now, no amendment will be made (to Income Tax Act 1967 – Section 77A) following the enforcement of the Companies Act 2016,” IRB told SunBiz.

The Federation of Malaysian Manufacturers (FMM) had called on the IRB to amend its rules in line with SSM’s exemption, allowing for companies eligible for exemption to file returns without auditing their accounts.

FMM, when asked to comment on IRB’s stand, said that while there may not be a need to amend Section 77A of the Income Tax Act, it opined that there is a need for IRB to amend its administrative practice to allow for the filing of unaudited accounts by companies given audit exemptions by the SSM.

It said although not specifically mentioned in Section 77A of the Income Tax Act 1967, the IRB’s website hyperlink to the company tax return form (e-C 2017) did make a note that with effect from Year of Assessment 2014, companies are required to furnish their returns based on audited accounts.

In this respect, FMM said, it appears that the requirement for audited accounts is an administrative procedure set by the IRB.

“Hence, while it may not be necessary to amend Section 77A, IRB should amend its administrative practice to be in line with the new SSM relaxation and update its website accordingly. This would remove uncertainties for companies eligible for audit exemption granted by SSM,” FMM told SunBiz.

“Otherwise, IRB’s administrative requirement effectively invalidates the audit exemption granted by SSM as well as the commission’s good intentions to help reduce the cost of doing business by eliminating unnecessary compliance cost for eligible small companies,” it added.

FMM said it would be writing to the IRB for confirmation on its understanding of the submission of company tax returns vis-à-vis the SSM’s audit exemption.

SSM deputy CEO (regulatory & enforcement) Nor Azimah Abdul Azi, when asked to comment, said SSM had engaged IRB on the proposed audit exemption criteria prior to the release of the Practice Directive 3/2017 on Aug 4, 2017 and there was no objections to SSM’s exempting certain categories of private companies fulfilling the criteria from audit requirements.

“Audit exemption is being introduced in Malaysia for the first time and we are optimistic that companies and industry players will embrace the change in due time,” Azimah told SunBiz.

She said as audit exemption is only an option made available to companies to do away with audit, SSM believes that corporate communities and industry players in Malaysia are mature enough to decide on the best way of doing business that works well in the interest of their business ventures.

“The requirement to prepare accounts is intact and companies that opted for audit exemption would still be required to lodge unaudited financial statements with SSM. In this regard, there will be no vacuum in public information.

“We do not believe it will affect the filing of tax returns as filing of tax returns is a mandatory obligation imposed upon companies under the Income Tax Act 1967,” said Azimah.

Audit exemption is being implemented on a staggered basis. For dormant companies incorporated on or after Jan 31, 2017, it will be effective from Jan 31, 2017; dormant companies incorporated on or before Jan 30, 2017, from Sept 1, 2017; zero-revenue companies from Jan 1, 2018 and threshold-qualified companies from July 1, 2018.

“SSM will be reviewing the audit exemption criteria from time to time to ensure they are in tandem with corporate expectations and, at the same time, preserving the values of corporate governance,” said Azimah.

WASHINGTON, Oct —The US Supreme Court kicks off its new nine-month term today with a major employment case that could deprive workers of the ability to join together to file lawsuits when taking on companies over a wide range of labor disputes….

PETALING JAYA: The extra grace period from the deferment of the net stability funding ratio (NSFR) implementation to Jan 1, 2019 will most likely ease pressure on banks’ net interest margins (NIM), as the risk of a sharp upward surge in cost of funds minimises, said Kenanga Research.

“However, we still do not rule out banks chasing a cheaper and easier source of funding, which is deposits (against capital funding) that could be at the expense of marketing cost, as credit demand accelerates ahead.”

“We also do not rule out the banks reducing their exposure to long-term loans as higher long-term loans will put pressure on NSFR and the banks will have to compensate by having higher long-term funding thereby adding pressure on their funding costs,” the research house said.

It is positive on the deferment and said the move is welcomed as some banks have been struggling to achieve the minimum regulatory requirements before Jan 1, 2018.

All in, Kenanga maintained its “neutral” stance on the sector as the prevailing challenges in the economy still remain.

It maintained its “market perform” call for most of the banking stocks in its coverage with the exception of Affin Holdings Bhd, AMMB Holdings Bhd, Alliance Bank Malaysia Bhd, CIMB Group Holdings Bhd and RHB Bank Bhd, which are at “outperform”, due to their undemanding valuations.

Meanwhile, HLIB Research said as banks have already taken measures to meet the requirements (NSFR and liquidity coverage ratio (LCR)), it foresees no material impact on banks’ balance sheet structure and near-term profitability.

“Most banks have started the exercise to rebalance their deposit structure since late 2015. The most common strategy is to compete for more sticky individual deposits in meeting the NSFR regulations (sticky deposits represent high bearing in available stable funding).”

HLIB said risks include deteriorating asset quality that will impact banks provisioning level and high household debt that will limit consumers’ ability to further gear up.

“We keep our ‘neutral’ stance on banking sector due to modest growth outlook for earnings, loan and deposit growth in the environment of stable gross domestic product expansion. We expect share price movements of banking stocks to be more muted into the remainder of the year as we see limited re-rating catalyst for the banking sector,” said HLIB. Its top picks are Malayan Banking Bhd and BIMB Holdings Bhd.

KUALA LUMPUR, Oct 1 — The Malaysian Rubber Board (MRB) is striving to make it compulsory for rubber bitumen to be used in new road construction through a policy starting the middle of next year, its Research and Innovation Deputy…

BEIJING: Beijing’s decision to shut down bitcoin trading platforms has left investors scrambling to cut their losses and threatens to deprive the crypto-currency of a crucial market. “The authorities don’t understand anything about bitcoin!” fumed Zhang Yanhua, founder of an investment fund that was dead on arrival after Beijing started tightening the screws at the start […]

KUALA LUMPUR, Oct 1 — The Belt and Road Initiative (BRI), China’s mega infrastructure project for the 21st century, is poised to widen the use of the renminbi (RMB), thus further promoting its internationalisation, said an economics professor….

KUALA LUMPUR: Bursa Malaysia is likely to stage a mild recovery next week with the key index inching towards the 1,772-level on bargain hunting, said an analyst.

The Malaysian Association of Technical Analysts President, Nik Ihsan Raja Abdullah said the local market, which experienced a sell-off in the week just-ended, would turn positive on the back of the expected recovery in oil prices that would soften the impact of capital flight.

“The oil market is recovering quite well. In the last two weeks, it traded around US$55, (RM232.25) per barrel and now trading at US$57/US$58 per barrel … that should be a signal,” he told Bernama.

The recent sell-offs on the local bourse were triggered in part to external developments.

In the US, the Federal Reserve (Fed) had maintained interest rates at its Sept 19-20 meeting but signalled it expected one rate hike by end-2017 and would begin to unwind its US$4.5 trillion balance sheet in Oct while President Donald Trump announced a corporate tax reform.

The US Federal Open Market Committee has another two meetings out of eight annual scheduled meetings towards the end of the year.

Bursa Malaysia was in the negative territory for the last nine consecutive sessions, with the FTSE Bursa Malaysia KLCI (FBM KLCI) falling a cumulative 30.75 points to end the third quarter of 2017, as market sentiment in the Asian region was affected by fresh tensions between North Korea and the US, as well as, the comments by made by Fed Chair, Janet Yellen, on a possible rate increase.

On a weekly basis, the benchmark FTSE Bursa Malaysia KLCI fell 15.46 points to 1,755.58 from 1,771.04 on Thursday last week.

HONG KONG, Oct 1 — Casino magnate Lawrence Ho — son of Macau gaming legend Stanley Ho — is eyeing a major foray into Japan as he seeks to broaden his family’s reach beyond the world’s biggest gambling hub. His father was credited…

NEW YORK, Oct 1 — Citigroup Inc and the wreckage of Lehman Brothers Holdings Inc have resolved a fight over US$2.1 billion (RM8.8 billion) that dates to the financial crisis, while quietly burying a key question about derivatives-trading…